Tether zeroed exposure to Chinese commercial papers

abdelaziz Fathi

World’s largest stablecoin issuer, Tether dismissed reports suggesting that the majority of its commercial paper portfolio is backed by Chinese or Asian securities being traded at a discount.

Tether

Tether, which is closely affiliated with crypto exchange Bitfinex, has drastically reduced its holdings of commercial debt in its reserves over the last six months. Instead, the stablecoin issuer allocated most of its non-fiat reserves to Treasury bills, almost doubling assets in short-term government securities.

As the company continues to face questions about what its USDT token is actually backed by, Tether has been reducing the amount of corporate debts in its reserves. In the September-December quarter, commercial papers made up nearly a third of Tether’s total holdings compared to 44% in the previous quarter.

Per its own statics, Tether’s portfolio holds no Chinese commercial paper and as of today, its total commercial paper exposure has been reduced yet again to a mere ~$3.7 billion (from $30 billion in July 2021). The company also plans to further decrease to ~$200 million by the end of August 2022 and to zero by end of October/early November 2022.

In absolute terms, the value of these instruments dropped by more than $24 billion. Additionally, Tether reduced its cash assets, from $7.2 billion to $4.2 billion.

Has anyone seen tether’s billions?

“The spreading of false information is the biggest threat to the cryptocurrency industry that currently exists. It is a threat of the same concern as scams, hacks or cyberattacks because the spreading of false information risks not only the reputation of the industry but also each and every member of the community. With that in mind, Tether would like to again reiterate to naysayers who continue to spread falsities about its commercial paper holdings, that you are wrong,” the statement further reads.

As part of its settlement with US regulators last year, Tether is required to release quarterly attestations of its assets and liabilities in order to be more transparent with its token holders over what exactly backs its stablecoin.

Regarding the recent events impacting Celsius, Tether clarified that its position with the crypto lender has been liquidated with no losses. It confirmed that its lending activity with Celsius has always been overcollateralized, just as with any other borrower. As such, Tether has currently zero exposure to Celsius apart from a small investment made out of its own equity.

Tether also issued a response to a surfaced report suggesting that it has lending exposure to Three Arrows Capital. It denied the rumors, even accusing the authors of unethical motivations.

The new disclosure comes as the meltdown in other stablecoins rippled through cryptocurrency markets and pushed USDT itself below its dollar peg.

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